The Relentless Con Job By The Rich. The Big Lie In Economics

The efforts of the rich to become even richer never end.

The rich incessantly promulgate lies about our economy. More importantly, they bribe the primary influencers — the politicians, the media, and the economists — to spread the Big Lie that federal spending is funded by federal taxes.

File:Scottpelley.jpg - Wikimedia Commons — **Bernanke: “It’s not tax money… We simply use the computer to mark up the size of the account.”**

In reality, federal spending is funded by ad hoc federal money creation, not taxes.

Unlike state and local government taxes, all federal tax dollars are destroyed upon receipt.

The tax dollars no longer exist in the economy (the private sector), and since the federal government has infinite dollars, the tax dollars no longer exist anywhere.

The Big Lie convinces the populace that the federal government’s ability to provide benefits is financially limited by tax receipts.

(Politicians are bribed via campaign contributions and promises of lucrative jobs. The media are bribed via advertising dollars and actual ownership. Economists are bribed via gifts to universities and lucrative positions on “think tanks.”)

Whenever you hear about a federal benefit, and someone asks, “Who will pay for it?” you should know you are about to listen to the Big Lie. The answer is: “The federal government will pay for it by creating dollars.”

Quote from former Fed Chairman Ben Bernanke when he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

“Social Security and Medicare are about to become insolvent” is an example of the Big Lie, the purpose of which is to distance the rich from the rest of us.

“Rich” is a comparative, not an absolute. If you have a million dollars, you are rich if most others have less than a million. But you are not wealthy if everyone else has ten million.

That leaves you two ways to become richer: Get more for yourself or make the others have less. The rich in America have chosen both courses.

They try to grab more for themselves; their efforts to force you to have less are not as obvious.

The rich receive most of their income from sources other than salaries. Consider FICA. Congress has deemed FICA should be collected only from salaries, not from other forms of income.

Further, Congress has decided FICA is to be collected on salaries less than $142,800. Anything above that is not taxed.

The FICA limit is just one of the thousands of tax breaks the rich have “encouraged” Congress to give them. The purpose: To widen the Gap between them and you. Widening the Gap makes them richer.

U.S. federal finances are unlike state & local government finances, business finances, and euro nation finances.

The Map and the Territory, by Alan Greenspan | Financial Times — **Former Fed Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”**

The U.S. government is Monetarily Sovereign. It has the unlimited ability to create its own sovereign currency.

It never unintentionally can run short of dollars.

Yet we see organizations funded by the rich claiming that federal spending, which goes to the middle- and lower-income people, is detrimental to the middle- and lower-income people.

They want you to believe you should receive lower benefits and pay more taxes.

If they can cement that belief in your minds, you’ll vote for the very people who take money from your pocket.

Here is the entirety of a page posted by the Committee For A Responsible Budget, one of the organizations that continually tries to foist on you the false idea that you should have less.

Every single sentence, including the headline, is false and/or an outright lie:

Why High and Rising National Debt is a Problem

FALSE. High and rising National (i.e., federal) Debt is not a problem. It is not even Debt. It is the total of deposits into Treasury security accounts at the Federal Reserve.

These accounts resemble safe-deposit boxes. When you buy a T-bill, T-note, or T-bond, you open an account at the Federal Reserve and deposit your dollars into it.

The federal government never touches those dollars. It has no need to.

The government can pay off the so-called “debt” merely by returning to you the dollars in your account.

This is no burden on the government, taxpayers, or the economy. There is no “Problem.”

High and rising national Debt will threaten economic growth and the standard of living for all Americans. High Debt will slow the growth of the economy and wages.

FALSE. Federal “debt,” i.e., the total of deposits in T-securities, is set by law to equal the cumulative total of federal deficits.

Bernanke sees decent chance for Fed to pull off a 'soft-ish landing' | The Hill — Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Deficits are the difference between the amount of money the government takes out of the economy vs. the amount it puts in (with some going to foreign nations).

Rising national “debt” occurs when the federal government puts more dollars into the economy than it takes out.

There is no mechanism by which adding money to the economy can “slow the growth of the economy and wages.”

On the contrary, when economic growth slows, the government adds more stimulus dollars (increases the “debt”) to prevent or cure a recession.

The “debt” has no direct effect on wages, which are a function of business profits (stimulated by federal deficit spending) and labor supply.

As Debt rises, higher interest payments will crowd out important investments in areas like education, infrastructure, and research that can help grow the economy.

FALSE. Federal Debt does not force higher interest rates. Interest rates are set arbitrarily by the Federal Reserve to control inflation.

The peaks and valleys of changes for Federal deficits (blue) neither correspond to changes in Interest rates (red) nor are they a leading indicator. Note the 12 years 2008 – 2020, when federal deficit spending grew massively while interest rates neared zero.

Federal interest payments do not “crowd out” other federal payments for “education, infrastructure, and research. The federal government has infinite money with which to pay for anything.

During periods of high deficit spending, interest rates have been low.

Getting the Debt under control once the crisis is over will be very beneficial for generations to come, from higher wages to increased investment to lower borrowing costs for families and businesses.

FALSE. This paragraph is just a restatement of the previous section. There is no mechanism by which fewer dollars coming into the economy can cause “higher wages, increased investment, and lower borrowing costs.

The last decade shows the opposite: Higher deficits along with higher wages, increased investment, and low borrowing costs.

The Congressional Budget Office predicts that the economy will grow faster with Debt on a declining path as opposed to a rising one.

FALSE: History shows that declining Debt leads to depressions and recessions.

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

The reason is quite simple. Reducing federal Debt requires taking dollars out of the economy.

Just as adding stimulus dollars to the economy prevents and cures recessions and depressions, taking dollars out of the economy causes recessions and depressions.

The rich do not fear recessions and depressions. They are less harmed than the rest of us. They have more cushion to weather the hard times.

During recessions and depressions, workers become more desperate for jobs, giving the rich the opportunity to cut wages and increase their own relative incomes.

In addition to publishing the completely non-sensical paragraphs just discussed, The rich-run CRFB runs “hearings” on the condition of the government’s finances.”

These hearings contain nothing more than recitations of the Big Lie — false propaganda we have just discussed. The purpose will be to give Congress excuses to:

- Cut Social Security benefits
- Cut Medicare benefits
- Eliminated Obamacare
- Increase FICA taxes
- Cut other benefits for the poor and middle-classes
- Widen the income/wealth/power Gaps between the rich and the rest

The drumming of lies and misstatements from the rich and toadies for the rich is relentless. So long as it works to indoctrinate the public, it never will end.

The attempts at indoctrination end only when you, the public, demonstrate your understanding of the lies and your willingness to punish the liars.

Fool you once; shame on them. Fool you thousands of times, over and over and over; shame on you.

[No rational person would take dollars from the economy and give them to a federal government that has the infinite ability to create dollars.]

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

Two pieces of knowledge could turn America into a paradise

We could turn America into a paradise by understanding two truths: 1. Our Monetarily Sovereign federal government never can run short of money.

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.“

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.

Money is not a physical object. It is not a dollar bill or a coin, both of which are titles to money, not money itself. Money is nothing more than numbers on a balance sheet. The federal government has absolute control over its balance sheets. It can change numbers at will, merely by passing laws, which is how it created the first U.S. dollars. It simply passed laws. The federal government can add money to your checking account by instructing your bank to increase the account’s balance. It sends your bank a “Pay to the order of” document. New dollars are created and added to your account when your bank obeys those instructions. Federal checks don’t bounce because Congress passes laws to prevent bouncing. Example: Every time we reach a “debt ceiling,” Congress raises it so that federal checks are honored. That is how the federal government pays bills and creates dollars. 2. Federal spending never causes inflation. Shortages of critical goods and services cause inflation. The most common inflation-causing shortage is the shortage of oil.

The blue line is inflation. Purple is oil pricing. Vertical gray bars are recessions. Inflation tends to parallel oil pricing. The data show that oil shortages cause oil prices to rise, leading to inflation.

The best way to cure inflations is to remedy the shortages. Contrary to popular wisdom, federal spending does not cause the shortages that cause inflation.

Again, the blue line is inflation. The red line represents federal deficit spending. You’ll see no parallelism here. The data show that spending does not cause inflation.

The federal government cannot run short of dollars, and federal deficit spending does not cause inflation. Once you fix those two absolute truths in your mind, you will understand the rest of this post. We cannot rely solely on a private sector, constrained by money supply and the profit motive, to finance what the world needs. The federal government is constrained neither by money supply nor profit motive. Here is how I visualize paradise. No poverty. No hunger. No crime. No “bad” neighborhoods. Good healthcare for all. The Gaps between the richest and the rest are narrow. All who want a good education receive one. Children and the elderly receive good care. There is plenty of good food, good water, suitable affordable housing, good air, and good weather. How do you visualize paradise? Here are just a few of the things we could do: 1. Provide free, comprehensive, no-deductible healthcare and long-term care to everyone in America, regardless of age, income, or health history. The government can pay for everything related to medical care: Doctors, nurses, hospitals, drugs, ambulances, equipment manufacturers, etc. There would be no need for Medicare Part A, B, C, D, or Supplementary. The government would function as the insurance company. It would not be “socialized medicine.” As with Medicare, the government only would pay, not administer. Doctors and nurses still would make all medical decisions. 2. Eliminate the Federal Insurance Contribution Act (FICA) tax on employees and employers. FICA is the ultimate regressive, anti-employment tax that is utterly useless. Contrary to popular myth, FICA does not fund Social Security or Medicare. FICA dollars taken from employees and employers come from the economy. Those dollars are destroyed upon receipt by the U.S. Treasury. 3. Provide tax-free Social Security benefits to everyone in America. Each person would receive the same benefits. There would be no age, current employment, or previous employment history deductions. This may be the most direct benefit to employ because it can be done at the stroke of a pen. President Obama did it temporarily in 2011. FICA should be cut permanently. Payroll-Tax Cut Measure Signed Into Law by Obama 4. Provide free college for everyone who wants one. Education is so essential to America’s future that the founders of this nation made sure it was provided free to everyone — at least, for grades K-12, where monetarily non-sovereign (state & local) governments offer it. Today, college is far more critical than it was back in the 1700s, so for the same reasons that grades k-12 generally are free, college should be free and accessible to all. 5. Pay a salary to all those attending school. Going to school is a job, like any other job. America needs an educated populace. Many children, especially those of high school and college-age, don’t attend school because they and their families need income. A school salary will help young people resist the temptation to quit school, commit crimes, or join gangs. 6. Federally funded school lunch for pre-school through grade 12. No means-testing, thus eliminating the stigma.

The National School Lunch Program (NSLP) is a federally assisted meal program operating in public and nonprofit private schools and residential child care institutions. It provides nutritionally balanced, low-cost lunches to children each school day.

About 7.1 million children participated in the NSLP in its first year. By 2016: 30.4 million children participated.

Like most federal programs, the NLSP is unnecessarily complex and means-tested. There is a lunch program (“high lunch” and “low lunch), a breakfast program (“severe-need” and “non-severe need), an after-school-snack program, a special milk program, a summer food service program, and a seamless summer program, each having various remuneration schedules. Rather than having a government agency serve as America’s dietician, the entire breakfast/lunch program should be handled like Medicare, where the doctor makes the decisions and Medicare pays the bills. For NLSP, the local dietician should schedule the meals and submit costs to the government. Not only would this be simpler, but it would encourage serving fuller, better, more nutritious meals. 7. Eliminate means-testing from all federal programs. Federal means-testing is complex and expensive. It arbitrarily defines who will receive benefits and eliminates the poor who almost, but not quite, are poor enough. Means-testing stigmatizes those who receive benefits; it encourages cheating to qualify and discourages efforts to improve one’s means. A classic means-testing example is the Supplemental Nutrition Assistance Program (SNAP, food stamps). It is a massively complex program with many requirements. According to the Council on Aging:

*The Supplemental Nutrition Assistance Program, or SNAP, is the most extensive domestic hunger safety net program, helping low-income older adults achieve food security.

*Approximately three out of five seniors who qualify to receive SNAP are missing out on benefits—an estimated 5 million people.

*For older adults with low income, the $1,248 average annual benefits can mean the difference between having food and going without.

Federal means-testing has one purpose: To minimize the amount of money the federal government spends. Yet, there is no reason the federal government ever needs to minimize spending. The federal government has infinite money; federal spending creates economic growth, and federal spending does not cause inflation. Federal means-testing for benefit programs is all negatives with no positives. It is based on the false premise that the federal government’s finances are limited, like state and local government finances. 8. Financially support the research, development, and usage of renewable, low- or zero-carbon energy. We have begun to experience the terrible result of carbon-based fuels. Global warming is upon us, with even worse results coming. The government must do much more to encourage zero-carbon energy: solar, wind, geothermal, hydrogen, hydro, and nuclear. It must fund research on unknown or unproven energy sources, for instance, the massively expensive tokamak. Solar panel production should be supported, and installation should be free. Financial support should be given to companies offering existing forms of renewables and to people who use renewables. That will help reduce climate change and take inflationary pressure off oil. 9. Financially support the research and development of low-carbon-fueled cars, trucks, buses, ships, trains, airplanes, homes, offices, and factories. This includes funding research into more efficient batteries and electric infrastructure, transmission networks, superconductors, and charging stations. 10. Financially support the purchase and use of low-carbon-fueled cars, trucks, buses, ships, trains, airplanes, homes, offices, and factories. Often, the public is slow to adopt new technology, especially if it is not immediately and financially beneficial. The federal government has the power to make adoption financially beneficial while R&D brings the technology into economic self-sufficiency. 11. Financially support water purification and desalination research, development, and distribution. The world is covered with water that isn’t good for drinking or growing crops. We need more efficient water purification, desalination, transportation, and usage. America is losing its fresh water daily.

An ‘environmental nuclear bomb’ as Utah’s Great Salt Lake dries up.

What is Water Scarcity? Water scarcity involves water crisis, water shortage, water deficit or water stress.

Water scarcity can be due to physical water scarcity and economic water scarcity. Physical water scarcity refers to a situation where natural water resources are unable to meet a region’s demand while economic water scarcity is a result of poor water management resources.

About 70% of the Earth’s surface is covered with water, and 3% of it is actually freshwater that is fit for human consumption. Around two-thirds of that is tucked in frozen glaciers and unavailable for our use.

“Water scarcity already affects every continent and around 2.8 billion people around the world. More than 1.2 billion people lack access to clean drinking water.””

Causes of Water Scarcity: Overuse, pollution, conflict, distance, drought, governmental access, global warming, illegal dumping, groundwater pollution, and natural disasters.

All of these can be moderated or eliminated by properly used government funding. 12. Financially support farmers and advanced farming methods (for example, hydroponics, genetic engineering of more productive, healthful crops, reduced use of fertilizers, water, and pesticides). The federal government financially should support the purchase of efficient farm equipment. American farmers are nearing extinction. President Trump’s trade war hasn’t helped matters. After the United States slapped tariffs on Chinese goods, including steel and aluminum, last year, China retaliated with 25 percent tariffs on agricultural imports from the U.S.China then turned to other countries such as Brazil to replace American soybeans and corn. Even large companies are facing unprecedented challenges; Dean Foods, a global dairy producer that buys milk from thousands of small farmers, filed for bankruptcy in 2019. 13. Give more financial support to pure scientific research. Unlike applied research, pure research is not designed to result in profits. Its purpose is to add to scientific knowledge. It is why we went to the moon and want to go to Mars, not for immediate gains but for learning. Sometimes we learn much that is valuable today. Sometimes we find that much we may discover has value 100 years from now. We build a long-term knowledge base handed down through the generations. That is one of the qualities that differentiates humans from all other animals. Even “failed” research has immediate value in showing what doesn’t or might work in the distant future. Failed research can be the beginning of serendipity. The profit-motivated private sector cannot justify doing much pure research. For example, pharmaceutical companies are reluctant to spend money searching for the causes and cures of rare diseases. But that research is valuable, not only for curing rare diseases today, but it may lead to other purposes we hadn’t even imagined. Consider such projects as weather prediction and control, meteor and comet protection, volcano prediction and control, 14. Support the states with a per-capita payment. Something like Social Security for the U.S. states. State and local governments are monetarily non-sovereign.

Unlike the Monetarily Sovereign U.S. government, states generally run short of the dollars they need to take care of local problems: Schools, streets, infrastructure, parks, garbage/recycling/water, police, fire departments, etc. Most states borrow, which means they later will need to spend less (provide less to their residents), tax more (take more from their residents), or both. The federal government should take those burdens from local taxpayers’ shoulders. 15. Federal support for the postal service. The mail is as vital to America as any other government service. There is no public benefit to requiring the postal service to pay its own way.

The Postal Service receives no direct taxpayer funds. It relies on revenues from stamps and other service fees.

Although COVID-19 has choked off the USPS revenue in recent months, factors that arose well before coronavirus have contributed to the unsustainability of the Postal Service’s financial situation for years.
While the USPS generates enough revenue to cover its operating costs, its pension and retiree health care liabilities push its bottom line into the red. The USPS has operated at a loss since 2007. Because of the rise of email and digital communication, USPS has seen the volume of First-Class Mail decline from a peak of 103.5 billion pieces in 2000 to just shy of 55 billion pieces in 2019. USPS has tried to increase the delivery of marketing mail and has tried to compete with UPS and FedEx in the parcel delivery sector, including by forging a delivery deal with Amazon. This has provoked criticism from (past) President Trump (Because of his personal animosity with Jeff Bezos.)

16. Increase support for the arts. The arts are the difference between seeing the world in color vs. drab shades of gray. Science provides pronouns, nouns, and verbs, but the arts offer adjectives, adverbs, and interjections. To live as humans, we need music, painting, architecture, poetry, and literature. If you have visited or seen photos of Soviet-era architecture, you understand the cold, functional, inhumanity of a joyless world. 17. Eliminate income taxes on all but the top 1%. The Gap is too wide, and it is widening. In that regard, here is what FOX wrote:

In 2018, the top 1% of taxpayers – defined as those with adjusted gross income (AGI) (AGI) above $540,009 – earned 20.9% of all AGI and paid 40.1% of all federal income taxes, according to data from the Tax Foundation.

The group paid more in income taxes (at about $615 billion) than the bottom 90% of taxpayers combined ($440 billion).

Do you see what’s wrong with what the mouthpiece for the rich wrote? That 20.9% figure is bogus. Much of the income the top 1% receives isn’t counted in AGI (Adjusted Gross Income.) Think of the fully paid, comprehensive health insurance, travel, meals, vacations, apartments, stock options, entertainment, clothing, taxis, and other expenses that companies spend on behalf of key employees. You pay for those things using your AGI dollars, but the upper 1% doesn’t. The richest among us may not remember what it’s like to write a personal check. Do you think Donald Trump even carries a wallet? Then there is real estate depreciation, which is how billionaire Donald Trump pays fewer tax dollars than you did. And remember, FICA and other taxes paid by the “lowly” 99% are not paid by the 1% who don’t take salaries. GOVERNMENT WASTE Waste is bad. The word “waste” is a pejorative. State and local government waste comes out of your pocket. But federal waste is another matter. The dollars cost you nothing. In fact, wasted federal spending adds stimulus dollars to the economy. Of course, it would be far better for those dollars to have produced something of value, but the mere spending benefits us all. So, don’t worry so much about wasted federal spending. Of course, we want federal dollars to be functional, but even the most outrageously wasted dollars — bridges to nowhere — still add to the nation’s economic growth. SUMMARY There is so much the wealthiest entity on the planet — the U.S. government — could do to benefit Americans and the world. But, the government is restricted by the widespread false belief that federal finances are like state and local government finances. That false belief seems logical to the private sector, which is monetarily non-sovereign and limited in what it can spend. I have listed several areas where the populace would benefit from federal money input. You probably can think of many others. None of these suggestions involves socialism, which is ownership and control. All the federal government would be asked to do is provide money. The federal government already has the power to bring us closer to paradise. You only need to understand the two essential truths and convey them to the world:

The federal government cannot unintentionally run short of dollars.
Federal deficit spending does not cause inflation and often can cure inflation.

Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account. (Quote from Ben Bernanke when, as Fed chief, he was on 60 Minutes:)

Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

Press Conference: Mario Draghi, President of the ECB, 9 January 2014 Question: I am wondering: can the ECB ever run out of money? Mario Draghi: Technically, no. We cannot run out of money

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most critical problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socioeconomic ranking and to come nearer those “above.” The socioeconomic distance is referred to as “The Gap.”

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

Do you understand how “The Big Lie” affects you and everyone else? The answer is here.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

Quote from Ben Bernanke when, as Fed chief, he was on 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

Press Conference: Mario Draghi, President of the (Monetarily Sovereign) ECB, Question: I am wondering: can the ECB ever run out of money? Mario Draghi: Technically, no. We cannot run out of money.

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The Big Lie in economics, simply stated is: The U.S. government unintentionally can run short of U.S. dollars.

In 1792, the U.S. government created the first U.S. dollars from thin air. It arbitrarily passed laws that created as many dollars as it wished, and gave those dollars the value it wished. Since then, the U.S. government continues to create U.S. dollars, and it arbitrarily has changed the value of the dollar many times.

Since its founding in 1776, the United States has had a variety of monetary systems including bimetallic systems where the dollar was backed by both gold and silver (1792-1862), a fiat monetary system (1862-1879), a full gold standard (1879-1933), and a partial gold standard (1933-1971).

Each new system changed the value of the dollar.

A Billion Dollars Was Transferred Over Venmo In January | Money cash, Money stacks, Investing — **The federal government has the infinite ability to create dollars, without inflation.**

From 1971 to present the United States has been on a fiat monetary standard.

The U.S. government can create laws from thin air, and those laws can create dollars from thin air. The U.S. government cannot unintentionally run out of laws or dollars. For that reason, no agency of the U.S. government can run out of dollars unless Congress and the President wish it. Any time you hear or read about the U.S. government not being able to “afford’ some expenditure, or about some federal agency running short of funds, or about federal taxes needing to be increased, you are subject to The Big Lie. Being Monetarily Sovereign, the federal government neither needs, nor even uses, tax dollars to fund its spending. It creates dollars by spending; that is its primary dollar-creation method. Similarly, any time you read or hear that the federal “debt” is unsustainable, or the federal deficit is “unaffordable,” you are being told The Big Lie. Here is an article that exemplifies The Big Lie you are expected to believe:

Go-broke dates pushed back for Social Security, Medicare The annual Social Security and Medicare trustees report says Social Security’s trust fund will be exhausted in 2035, instead of last year’s estimate of 2034. By Fatima Hussein and Tom Murphy Associated Press WASHINGTON — A stronger-than-expected economic recovery from the pandemic has pushed back the go-broke dates for Social Security and Medicare, but officials warn that the current economic turbulence is putting additional pressures on the bedrock retirement programs.

The annual Social Security and Medicare trustees report released last week said Social Security’s trust fund will be unable to pay full benefits beginning in 2035, instead of last year’s estimate of 2034.

The year before that it estimated an exhaustion date of 2035. The projected depletion date for Medicare’s trust fundfor inpatient hospital care moved back two years to 2028 from last year’s forecast of 2026.

In the post titled, “’Wolf,’ ‘The sky is falling.’ ‘Social Security and Medicare will be insolvent'” you read why the Medicare and Social Security so-called “trust funds” are not trust funds at all, but rather are mere balance sheet notations on the government’s books — notations that the federal government can change at will. You might ask, “How is it possible for an agency of a government to run short of the dollars the government has the infinite ability to create.” The answer: It isn’t possible unless that is what the government wants. If Congress and the President wanted Medicare and Social Security to pay more benefits, they simply would pass a law mandating Medicare and Social Security to pay more benefits. And, if Congress and the President wanted to reduce or even eliminate the FICA tax, they would pay for the mandate the same way they pay for the military and all other federal expenses: By writing checks. No tax dollars are involved. And if Congress and the President wanted the nation to have free, no-deductible, comprehensive Medicare for every man, woman, and child in America, they could do that by passing laws. No tax dollars necessary. And if Congress and the President wanted every man, woman, and child in America to receive Social Security — even with triple the current benefit levels — they could pass the appropriate law. Again, no tax dollars need to be collected. The article continues:

“Economic recovery from the 2020 recession has been stronger and faster than assumed in last year’s reports, with positive effects on the projected actuarial status of the trust funds in these reports,” the report states.

The “actuarial status” assumes the FICA tax funds Medicare and Social Security “trust funds.” It doesn’t. FICA funds nothing. FICA,indeed all federal taxes are destroyed upon receipt. (This is not true of state/local taxes, which remain in the economy.) The federal government funds Medicare and Social Security by creating new dollars, ad hoc.

President Joe Biden said in a statement that the report “shows that the strong economic recovery driven by my economic and vaccination plans has strengthened programs that millions of Americans rely on and has put our nation in a better fiscal position.”

The U.S. cannot be “in a better fiscal position”; it already is in a perfect fiscal position. The government has zero fiscal need for taxes. Even without taxes, the federal government has the infinite ability to pay any bills it ever receives.

Social Security pays benefits to more than 65 million Americans, mainly retirees as well as disabled people and survivors of deceased workers.

Medicare covers roughly 64 million older and disabled people.

When the Social Security trust fund is depleted, the government will be able to pay 80% of scheduled benefits, the report said.

Medicare will be able to pay 90% of total scheduled benefits when the fund is depleted.

Wrong. The government already pays 100% of benefits and will be able to pay 100% of future benefits, no matter how many people are collecting benefits or how large those benefits prove to be. All dollars sent to the U.S. Treasury are destroyed upon receipt.

Income for Medicare’s hospital insurance fund is projected to be higher than estimates from last year because the number of covered workers who help fund it and their average wages are both expected to be higher.

Income is irrelevant for a government that has the infinite ability to create dollars.

A main source of financing is payroll taxes on earnings paid by employees and employers. About 183 million people paid those taxes in 2021.

Payroll taxes are nothing more than a deduction from the private sector — a net loss for Gross Domestic Product and the economy. They do not finance anything. The sole source of federal financing is the federal government’s Monetary Sovereignty.

The trustees of Social Security and Medicare include the secretaries of Treasury, Health and Human Services, and Labor, as well as the Social Security commissioner.

They are supposed to be joined by two public trustees, however those positions have been vacant since 2015.

The “Trustees” do nothing. They have no power. It’s all just a bookkeeping function, which is handled automatically by computers. That is why trustee positions can be vacant without harm.

A representative from the White House did not respond to an email inquiry about whether the president intends to nominate new public trustees.

Trustees are unnecessary.

The trustees report is an added reminder of the U.S. government’s financial troubles, as it juggles historically high inflation, recovery from a pandemic and Russia’s war in Ukraine.

The economy may have “financial troubles.” It can run short of dollars. But the government cannot have financial troubles. It has infinite dollars with which to pay its bills. And it has the unlimited ability to control inflation.

AARP CEO Jo Ann Jenkins said the reports “send a clear message to Congress: despite the short-term improvement, you must act to protect the benefits people have earned and paid into both now and for the long-term.”

The first step to “protect the benefits” is to stop telling The Big Lie.

“The stakes are too high for the millions of Americans who rely on Medicare and Social Security for their health and financial wellbeing,” she said.

This year, Social Security retirees got a 5.9% boost in benefits, the biggest cost-of-living adjustment, also known as COLA, in 39 years.

You, retirees, could have received a 10% or 100% or greater boost in benefits if Congress and the President wished it. Congress and the President have absolute control over benefits. The destructiveness of The Big Lie, is shown in the following article:

500,000 Floridians could lose health coverage, study says Christopher O’Donnell,Tampa Bay Times More than 500,000 Floridians could lose their health insurance if Congress fails to extend tax credits passed through the American Rescue Plan Act, a new report warns.

The tax credits dramatically lowered premiums for millions of Florida families who this year obtained their health insurance through the Affordable Care Act.

But those subsidies will expire at the end of this year as attempts by Congress to extend them have stalled.

Can you answer this question? Why would a Congress, that has infinite dollars at its fingertips, not be able to lower premiums for millions of families?

If lawmakers cannot reach an agreement, premiums could rise by 53% in 2023, forcing millions of Americans to go without health insurance.

Florida would be one of the states hardest hit, according to a study by the Robert Wood Johnson Foundation and the Urban Institute.

Roughly 96 percent of the 2.7 million Floridians enrolled in the Affordable Care Act were eligible for the tax credits this year. Without them, a household of four with an income of $111,000 will pay hundreds of dollars more in premiums next year.

Families that earn above that limit would no longer be eligible for the program. They could face an average increase of about $2,000 per year in premiums if they have to purchase private insurance.

The likely impact, the study warns, is the number of uninsured in Florida could rise by 25 percent, from 2 million to 2.5 million.

Families without health insurance typically forego critical preventative and early treatment of health issues until their condition forces them to seek emergency room care — the same strain on hospital resources and budgets that the Affordable Care Act was intended to relieve.

“A 53% increase on premiums could be very painful for a whole lot of families in the state of Florida.”
Of course, it’s not just Florida. The unnecessary pain will extend to families all over America. Can you answer this question? Why is this even an issue, for a government having unlimited financial resources?
Opposition to extending the tax credits has focused on the cost.

Extending them would increase the federal deficit by $25.3 billion in 2023 and by $305 billion over 10 years, the study says.

House Democrats can extend the credits via a reconciliation bill to clear Republican opposition.

But the fate of that program and many others depends on negotiations between President Joe Biden and West Virginia Sen. Joe Manchin to get the president’s social spending bill through the Senate.

Can you answer this question? Why are 100% of Republicans plus one Democrat opposed to providing federal financial aid to families?

U.S. Rep. Charlie Crist, D-St. Petersburg was critical of Republican Gov. DeSantis. Florida is one of only 13 states that continues to reject a provision of the Affordable Care Act — passed over a decade ago — that would expand Medicaid eligibility to more than 400,000 of the poorest Floridians.
The federal government pays 90% of the cost. So by expanding Medicaid, Florida will pay only 10 cents to receive each dollar the federal government pumps into its economy. Can you answer this question? Why would Florida refuse those many millions of support dollars? And why does Florida reject federal aid for its poorest residents?
In 2021, Florida lawmakers did pass legislation to make Medicaid available for for mothers and babies, extending their coverage from 60 days to a full year following childbirth.

But Floridians who earn less than the federal poverty level of $13,590 are not eligible for Medicaid as they would be in states that have fully expanded Medicaid.
Can you answer this question? Why are the poorest Floridians not eligible to receive federally supported Medicaid?
Since it took effect in 2014, the Affordable Care Act — often called Obamacare — has made health insurance affordable to more Americans by creating health insurance marketplaces and subsidizing the cost of premiums.

It helped the program add 2.5 million more Americans this year, expanding nationwide enrollment to a record 14.4 million.

“People who previously turned away and looked at alternative options like short term insurance were able to reconsider and saw a really affordable rate,” said Katie Roders Turner, executive director of the Family Healthcare Foundation.

She said a family of four that her group helped find insurance had just been hit with a $6,000 emergency room bill after their child developed a high fever because their short-term insurance policy included a large deductible.

Desperate people were buying junk insurance policies because they couldn’t qualify for federally supported insurance.

A lady named Graciela Lopez said subsidies in the Affordable Care Act enabled her to afford the coverage she needs to cover life-saving treatment. She was diagnosed with breast cancer three years ago and had a double mastectomy.

She sees an oncologist every three months and another specialist twice a year. She is also on daily medication that would cost $1,000 per month without insurance.

Most of the cost is covered through a marketplace plan offered by Blue Cross Blue Shield, which costs her $169 per month.

Insurance also pays for a substantial portion of the daily medication she takes to lower hormone levels that could trigger her cancer.

She is worried she won’t be able to afford a substantial premium hike.

“If I change my insurance, I have to find different oncologists,” she said. “I have to keep my insurance as long as I can.”
Can you answer this question? Why does Gracie Lopez, along with millions of other Americans, not receive free, comprehensive, no-deductible health care insurance paid for by the federal government? The answers to all of the above financial questions are:

The widespread (and false) belief the federal Monetarily Sovereign finances are the same and your personal (monetarily non-sovereign) finances, and that the federal government, like you, can run short of dollars.

The widespread (and false) belief that federal taxpayers fund federal spending or that the federal government borrows dollars.

The widespread (and false) belief that if Monetary Sovereignty were correct “someone” would have done “something” about it, and provided free Medicare, free Social Security, and other financial aids (See “Ten Steps To Prosperity” below) to every man, woman, and child in America.

The widespread (and false) belief that federal spending “overheats the economy” and causes inflation.

Gap Psychology, the desire of the rich who run America, to widen the income/wealth/power Gap beween them and those below them.

Both political parties are responsible for disseminating The Big Lie. The Republican party, being the party of the rich, is somewhat more culpable, but both parties, virtually all media, and most economists are guilty to some degree.

ANY TIME YOU READ OR HEAR . . .
. . . the U.S. government can’t ‘afford’ some expenditure, or about some federal agency running short of funds, or about federal taxes needing to be increased, you are a victim of The Big Lie.” (The federal government can’t unintentionally run short of dollars.)

. . . in reference to some proposed federal expenditure, “Who will pay for it?”, you are a victim of The Big Lie. (The government will create the dollars.)

. . . the phrase “taxpayers’ money” in reference to federal spending, you are a victim of The Big Lie. (Federal taxpayers’ dollars are destroyed, not spent.)

. . . that the federal deficit or debt are “unsustainable,” you are a victim of The Big Lie. (Federal deficits and so-called “debt” are infinitely sustainable.)

. . . concerns that China will stop lending to us, you are a victim of The Big Lie. (The federal government does not borrow dollars.)

. . . that federal spending causes inflation, you are a victim of The Big Lie. (Inflation always is caused by shortages, and actually can be cured by federal spending.)
Congress and the President could repudiate The Big Lie by changing laws, with a few strokes of a pen. We are now heading into midterm elections. Congress and the President care about two things: Money and votes. If you disagree with The Big Lie, contact your political leaders, and tell them how they can receive your money and/or vote.

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

“Wolf!” “The sky is falling” “Social Security and Medicare will be insolvent.”

Which of the following is a story with a false narrative: “The Boy Who Cried Wolf!” or “Henny Penny announcing, ‘The sky is falling,”or “The CRFB claiming, “Social Security and Medicare will be insolvent”?

Answer: All three are false narratives. The first two are meant to teach children valuable lessons. The third should teach adults a valuable lesson.

That lesson is: Don’t believe the Committee for a Responsible Federal Budget (CRFB) when it howls like a wolf, squawks like a chicken, and pontificates in solemn terms that Social Security and Medicare “trust funds” are running short of dollars.

It’s all lies.

Here is what the CRFB now says:

Trustees: Social Security and Medicare Headed for Insolvency in 13 and 6 Years The Social Security and Medicare Trustees just released their 2022 reports on the financial status of the Social Security and Medicare programs.

The Trustees show that the Social Security and Medicare Hospital Insurance (HI) trust funds rapidly approach insolvency. Their funding imbalances need to be addressed sooner rather than later to prevent across-the-board benefit cuts or abrupt changes to tax or benefit levels.

In effect, the CRFB claims:

1. Social Security and Medicare benefits are paid for by trust funds.

2. These “trust funds” will run short of money.

3. The solution to Medicare or Social Security insolvency requires cutting benefits and/or increasing taxes.

All three are factually FALSE.

1. SOCIAL SECURITY AND MEDICARE BENEFITS ARE PAID FOR BY TRUST FUNDS

Wrong.

To quote from the Peter G. Peterson Foundation website:

Federal trust funds bear little resemblance to their private-sector counterparts, and therefore the name can be misleading.

A private sector “trust fund” implies a secure source of funding.

(A federal trust fund merely tracks inflows and outflows for specific programs. There is no secure source of funding.)

In private-sector trust funds, receipts are deposited, and assets are held and invested by trustees on behalf of the stated beneficiaries.

In a federal trust fund, the receipts — as part of the M2 money supply measure — are destroyed upon receipt. They no longer are part of any money supply measure.

There are no stated beneficiaries, as the criteria for beneficiaries change daily.)

The federal government owns the accounts and can, by changing the law, unilaterally alter the purposes of the accounts and raise or lower collections and expenditures.

The federal government (Congress and the President) can do whatever they wish with the “trust funds”: Add to them, subtract from them, or change them to pay for anything or nothing.

At the click of a computer key or the passage of a law, the balance in any federal “trust fund” could be changed to $100 trillion or $0 or anywhere in between.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

If Congress and the President wished, the Medicare “trust fund” could be changed to pay for Las Vegas vacations, jewelry, Congressional vacations, etc. Almost every year, the federal government arbitrarily changes what Medicare will pay for and how much it will pay.

In fact, that is exactly what the CRFB suggests when it writes about “benefit cuts or abrupt changes to tax or benefit levels.”

In a real “trust fund,” the trustees would not have that control.

2. THESE TRUST FUNDS WILL RUN SHORT OF MONEY

Wrong.

The United States government is unlike state and local governments. It also is unlike euro governments, private businesses, you, and me. The U.S. government uniquely is Monetarily Sovereign. It is sovereign over the United States dollar.

In the 1780’s it created the original dollars from thin air and gave them an arbitrary value. Today, the government continues to create dollars from thin air and continues to provide them with an arbitrary value.

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

The government never unintentionally can run short of its own sovereign currency, the dollar. Even if the federal government didn’t collect a penny in taxes, it could continue spending forever.

This absolute control over the U.S. dollar means no federal government agency can run out of dollars unless Congress and the President will it.

The only way Medicare or Social Security or any other federal agency can run short of dollars is if Congress and the President want them to run short of dollars.

3. THE SOLUTION TO SOCIAL SECURITY AND MEDICARE INSOLVENCY REQUIRES CUTTING BENEFITS OR INCREASING TAXES

Wrong.

Despite all the pretense about fake “trust funds,” Federal taxes (which include FICA) do not fund Medicare or Social Security. Those FICA dollars deducted from your paycheck (but tellingly, not deducted from other sources of income received by the wealthier among us) — those FICA dollars do not pay for anything.

They merely become part of the federal government’s infinite supply, and effectively are destroyed. (You mathematicians know that infinity plus any amount still = infinity. Thus, your tax dollars do not increase the federal government’s supply of dollars by even one cent.)

In fact, with regard to Medicare Part B, there is a wholly different pretense.

While Medicare Part A (pays for hospitals and doctors, Part B pays for clinical research, ambulance services, durable medical equipment, and some drugs. And Medicare recipients are charged extra, above FICA, ostensibly to pay for Part B.

But in reality, those charges, like all dollars coming into the federal government, are destroyed upon receipt.

The solution for Social Security and Medicare insolvencies is simply for the federal government to pay for them, which it could do the same way it pays for everything: By creating new dollars, ad hoc.

So group the warnings about Social Security and Medicare “trust fund” insolvency along with the boy who cried, “wolf” and Henny Penny’s “the sky is falling” as silly, little lies. There are no “trust funds.” Congress and the President have absolute control over all federal agency finances.

All your tax dollars are for naught. The federal government could and should provide free, comprehensive, no-deductible Social Security and Medicare for every man, woman, and child in America.

Continuing with the CRFB’s charade:

The Social Security Trustees estimate the Social Security Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2034 and the Social Security Disability Insurance (SSDI) trust fund will not become depleted within the 75-year projection window for the first time since the 1983 Trustees’ report.

On a combined theoretical basis, assuming revenue is allocated between the trust funds in the years between OASI and SSDI insolvency, Social Security will become insolvent by 2035. Upon insolvency, all beneficiaries will face a 20 percent across-the-board benefit cut, which will grow to 26 percent by 2096.

The Trustees estimate a 75-year actuarial shortfall of 3.42 percent of taxable payroll for Social Security, which is slightly lower than the 2021 report’s estimate of 3.54 percent of payroll, but higher than any other year prior.

And blah, blah, blah. The CRFB substantiates the old saying, “Figures don’t lie, but liars figure,” by providing statistics to make their lies sound factual.

Ooh, it must be true. There even is a graph. Except the graph is phony. The “Trust Fund Exhaustion” is based on the lie that Social Security benefits are paid by the fake “trust fund.” It’s not a trust fund and it pays for nothing. It’s just a record of ins and outs.

And here is another graph of lies:

Same story. The “Trust Fund Exhaustion” is based on a lie. The phony “trust fund” pays for nothing.

Why does the CRFB tell such big lies?

I suppose it’s possible they don’t know they are lying, and that they are providing the misinformation out of economic ignorance.

Actually, I don’t think so. My belief, based on no data, is that they know it’s a lie. If I am correct, why are they lying?

It all comes down to Gap Psychology, the human desire to distance ourselves from lower income/wealth/power people, while coming closer to the higher income/wealth/power people.

Rich is a comparative word, not an absolute. You only can be rich if someone else is poorer. Without the Gaps, no one would be rich. We all would be the same. So, to become richer, you need the Gap below you to widen and/or the Gap above you to narrow.

And that even includes the rich, who want to be richer, which they can accomplish by making the rest of us poorer.

Because the rich control the politicians, it is no coincidence that FICA is deducted from salaries rather than from the investment income that is the major part of the income received by the rich.

And there even is a cap on the income subject to FICA.

And then there are all the tax loopholes available to the rich — you know, those loopholes that made it possible for billionaire Donald Trump to avoid paying any taxes at all in 8 of the past 10 years. (How does it feel to know you’ve paid more taxes than a billionaire?)

Part of the plan by the rich, to widen the Gap below them, is to make you pay unnecessarily for Social Security and Medicare, and not only to pay more, but to have your benefits cut and taxed.

So the CRFB, as a paid mouthpiece for the rich, does everything it can to “prove” you should pay more taxes and receive less in benefits, thereby widening the Gap between you and the rich.

And they have been quite successful. Now that you have seen their phony statistics, here are some real statistics: Inequality is rising. The rich are growing richer; the poor are becoming poorer.

The Gini coefficient measures inequality, where “0” represents perfect equality (Everyone has the same) and “1” represents perfect inequality (where one person has everything). The higher the line, the more unequal the measure is.

And finally, of the two major political parties, one, the Republicans, tend to believe the poor are poor because they are dumb and lazy, while the rich are rich because they are smart and work hard. Here is one example of that belief:

IN SUMMARY

The U.S. federal government is Monetarily Sovereign. It never unintentionally can run short of its own sovereign currency, the U.S. dollar. Even if $0 federal taxes were collected, the federal government could continue spending forever.
Medicare and Social Security, as agencies of the U.S. government, cannot run short of dollars unless that is what Congress and the President want. The federal government funds all its agencies’ pending by creating new dollars, ad hoc. All tax income is destroyed upon receipt.
The Medicare and Social Security “trust funds” are not trust funds. These fake trust funds do not pay for benefits, but only keep records of dollar inflow and federal spending. As mere record keepers, they neither can be solvent nor become insolvent.
There is no financial reason to cut Medicare or Social Security benefits or to increase taxes, or even to continue collecting taxes. The federal government funds benefits paid by both programs regardless of tax income.
“Rich” is a comparative, not an absolute. According to Gap Psychology, people generally wish to widen the income/wealth/power Gaps below and to narrow those Gaps above. The rich can become richer by acquiring more for themselves and/or by forcing those below to acquire less.
The rich run America by bribing politicians, the media, and economists. To make themselves richer, the rich widen the Gap below by backing false narratives and laws that reduce federal benefits to the poorer while increasing taxes on the poorer.

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

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